Chapter 1 - Porter, G.A., & Norton, C.L.

(2015)
Questions: 6 to 8, 11 to 16, 20 and 21;
Q6 : What is accounting?
Accouting is an information system that measures, processes, and communicates
financial information about a business entity.
Q7: How do financial accounting and management accounting differ?
Dựa vào đối tượng hay mục đích, các đặc điểm của kế toán để phân thấy được sự khác
nhau giữa FA&MA.
Q8: What are five different groups of users of accounting information? Briefly describe the types
of decisions each group must make.
External Users(FA): - Investors
- Creditors
- Regulatory Agencies, Tax Authorities, Customers, etc.
Để đánh giá trình trạng hoạt động của DN.
Internal Users(MA): - Management
- Employee
 Để dự tính giá chi phí, giá thành sản phẩm trong sản xuất

➖ Brief Exercises: 1-3 to 1-5;

BE1.3: Assume that you are starting a new business. In which type of business activity will you
engage first? Identify the order in which the remaining two activities will occur.
Financing ActivitiesInvesting ActivitiesOperating Activities

BE1.4: List three examples of external users of accounting information.

• Investors
• Creditors
• Regulatory Agencies, Tax Authorities, Customers, etc.

BE1.5: State the accounting equation. What two distinct parts make up stockholders’ equity?
Accounting equation: Assets =Liabilities + Owners’ Equity
Two distinct parts make up stockholders’ equity: capital stock and retained earnings.

Exercises: 1-1, 1-8, 1-10, and 1-12;

E1.1:
___F____ 1. Issued shares of stock to each of the four owners.
___I____ 2. Purchased two limousines.
___O____ 3. Paid first month’s rent for use of garage.
___F____ 4. Obtained loan from local bank.
___O____ 5. Received cash from customer for trip to the airport.
__ O____ 6. Paid driver first week’s wages.
___I____ 7. Purchased 500-gallon fuel tank.

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E1.8:

Item Appears on the Classified as

Example: Cash BS A
1. Salaries expense IS E
2. Equipment BS A
3. Accounts payable BS L
4. Membership fees earned IS R
5. Capital stock BS SE
6. Accounts receivable BS A
7. Buildings BS A
8. Advertising expense IS E
9. Retained earnings IS SE

E1.10:
1. What is Prestige’s net income for the year?

Revenues
Landscaping revenues $ 25,000
Total revenues 25,000

Expenses
Rent expense $ 6,500
Salary and wage expense 12,000
Total Expenses 18,500
Net Income 6,500

2. What is Prestige’s Retained Earnings balance at the end of the year?

Retained Earnings= Net Income+ Retained earnings, beginning of year- Dividends paid
during the year
=6,500+8,500-3,000
=12,000

3. What is the total amount of Prestige’s assets at the end of the year?
= Accounts receivable+ Cash+ Office equipment
= 4,500+ 13,000+ 7,500
=25,000

4. What is the total amount of Prestige’s liabilities at the end of the year?
= Accounts payable
= 5,000
5. How much owners’ equity does Prestige have at the end of the year?
Owners’ equity= capital stock + retained earnings=8000+12000=$20,000

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6. What is Prestige’s accounting equation at the end of the year?
Assets =Liabilities + Owners’ Equity
25,000=5,000+20,000

Problems: 1-2A.

Inormationf User of the Information

Manager Stockholders Franchisor
1. Expected revenue from the new service a b c
2. Cost of the franchise fee and recurring fees to be paid b c a
to the franchisor
3. Cash available to Billings, the franchisee, to operate b c a
the business after the franchise is purchased
4. Expected overhead costs of the service outlet a b c
5. Billings’ required return on its investment a b c

a. Need to know b. Helpful to know c. Not necessary to know

Chapter 1 - Warren, C.S., Reeve, J.M., & Duchac, J.E. (2018):

➖ Discussion Questions: 5, 8, 9;
Q5 : On July 12, Reliable Repair Service extended an offer of $150,000 for land that had been
priced for sale at $185,000. On September 3, Reliable Repair Service accepted the seller’s
counteroffer of $167,500. Describe how Reliable Repair Service should record the land.
$167,500 should be recorded because that was the price paid.

Q8: A business had revenues of $679,000 and operating expenses of $588,000. Did the business
(a) incur a net loss or (b) realize net income?
The business realized net income of $91,000 ($679,000 - $588,000).

Q9: A business had revenues of $640,000 and operating expenses of $715,000. Did the business
(a) incur a net loss or (b) realize net income?
(a) The business incurred a net loss of $75,000 ($640,000 - $715,000).

➖ Practice Exercises: PE1-1A, PE1-1B, PE1-2A, PE1-2B, PE1-4A, PE1-4B

PE1-1A:
It would be $380,000 because under the cost concept, the land should be recorded at the
cost to Clairemont Repair Service

PE1-1B:
$437,500

PE1-2A:
a.OE=675,000-215,000=460,000
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b.OE=(112,300+675,000)-(215,000+32,000)=540,000

PE1-2B:
a.OE=395,000-97,000=298,000
b.OE=(395,000-65,000)-(97,000+36,000)=197,000

PE1-4A:
Income statement for the year ended April 30, 2019.

Doanh thu: $2,180,000

Chi phí 400,000+25,000+1,300,000=1,725,000
Lợi nhuận: 455,000

PE1-4B
Income statement for the year ended August 31, 2019.
Doanh thu: $750,000
Chi phí 295,000+ 12,000+ 450,000=757,000
Lợi nhuận: -7,000

➖ Exercises: EX1-11, EX1-14, EX1-16, EX1-17

EX1-11 :
Indicate whether each of the following types of transactions will either (a) increase owner’s
equity or (b) decrease owner’s equity:
1. expenses b
2. owner’s investments a
3. owner’s withdrawals b
4. revenues a

EX1-14
It would be incorrect to say that the business had incurred a net loss of $8,000.
The excess of the withdrawals over the net income for the period is a decrease in the amount of
owner’s equity in the business.

EX1-16, EX1-17:

1. Accounts Payable BS 6. Land BS

2. Accounts Receivable BS 7. Rent Expense IS
3. Andrew King, Capital BS 8. Supplies BS
4. Cash BS 9. Wages Expense IS
5. Fees Earned IS 10. Wages Payable IS

➖ Cases & Projects: CP 1-1; CP 1-2

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CP 1-1: 1. Is Marco behaving ethically? Why or why not?
No, Marco is not behaving ethically. Paying for car expense which is for his own purpose of
commuting cannot be recorded as an expense of company.
2,Who is affected by Marco’s decision?
Marco

3. What other alternatives might Marco consider?

Ứng tiền của công ty để sửa chữa

CP 1-2
1. Colleen did not behave in a professional manner since Colleen omitted some of the financial
statements.

2.a be willing to provide bankers : IS, BS

not be willing to provide: Proprietary Operating Information, Personal Financial Information
b. What types of information about a business would bankers want before extending a loan?
Bankers typically want as much information as possible about the ability of the business and the
owner to repay the loan with interest
c. What common interests are shared by bankers and business owners?
If the business is successful, the bankers will receive their loan payments on time with interest,
and the owners will increase their personal wealth

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